Gold: ING says geopolitical tensions boost demand for safe-haven assets

Gold Prices Rise Amid Heightened Geopolitical Tensions

According to ING commodities strategists Ewa Manthey and Warren Patterson, gold is climbing as investors respond to growing unrest involving the US, Israel, and Iran. They highlight that gold’s reputation as a safe haven is being strengthened by steady real yields, robust central bank purchases, and expectations of monetary policy loosening. As a result, any potential declines in gold prices are likely to be limited, even if the current tensions ease.

Safe-Haven Appeal Supported by Ongoing Risks

Gold began the week on a strong note as markets reopened following a weekend marked by increased friction in the Middle East. The renewed geopolitical uncertainty has added a fresh risk premium to gold at a time when investor sentiment was already positive.

This environment further cements gold’s status as a favored asset for risk mitigation. In the near term, gold’s price is expected to be highly sensitive to news developments, leading to increased volatility.

If rising oil prices push inflation expectations higher while economic growth concerns persist, real yields are likely to stay subdued, which would continue to benefit gold. However, a stronger US dollar could temper gold’s upward momentum.

Should the conflict escalate further or disrupt energy supplies, gold could see significant gains due to higher oil prices, greater inflation expectations, and stable real yields. Prolonged uncertainty would likely keep both volatility and demand for safe-haven assets elevated. Conversely, if the situation stabilizes and energy markets remain unaffected, the initial surge in gold prices may subside as the risk premium on oil diminishes.

These developments reinforce the prevailing positive outlook for gold. Persistent central bank buying and the prospect of monetary easing later in the year continue to support the market. Even if geopolitical risks abate, these underlying factors suggest that any corrections in gold prices are likely to be modest rather than signaling a major reversal.

(This report was produced with assistance from artificial intelligence and subsequently reviewed by an editor.)